The International Monetary Fund (IMF) has affirmed Nigeria’s economy as the biggest on the African continent. The multilateral organization’s Economic Outlook, puts Nigeria’s Gross Domestic Product (GDP) at N314.73 billion in 2015 as against South Africa’s $280.36 billion.
In a report titled World Economic Outlook October 2016: Subdued Demand, Symptoms and Remedies, the IMF put Nigeria’s GDP at $415.08 billion, from $493.83 billion at the end of 2015.
Although Egypt’s 2016 data was reported as unavailable, its 2015 size remained at N330.15 billion while that of Algeria, one of the largest economies on the continent, was put at $168.31 billion.
“The picture for sub-Saharan Africa is increasingly one of multispeed growth. While growth projections were revised down substantially in the region, they mostly reflect challenging macroeconomic conditions in its largest economies, which are adjusting to lower commodity revenues, the report said.
In Nigeria, economic activity is now projected to contract 1.7 percent in 2016, reflecting temporary disruptions to oil production, foreign currency shortages resulting from lower oil receipts, lower power generation, and weak investor confidence.The IMF expects the Nigerian economy to grow by 0.6% in 2017, while global growth is projected to slow to 3.1 percent in 2016 before recovering to 3.4 percent in 2017.
According to the report,”while growth in emerging Asia and especially India continues to be resilient, the largest economies in sub-Saharan Africa (Nigeria, South Africa, Angola) are experiencing sharp slowdowns or recessions as lower commodity prices interact with difficult domestic political and economic conditions. Brazil and Russia continue to face challenging macroeconomic conditions, but their outlook has strengthened somewhat relative to last April.”
According to the IMF:”Activity weakened in sub-Saharan Africa, led by Nigeria, where production was disrupted by shortages of foreign exchange, militant activity in the Niger Delta, and electricity blackouts. Momentum in South Africa was flat, despite the improvements in the external environment—notably stabilisationin China. Elsewhere, resilience in Côte d’Ivoire,Kenya, Senegal, and Tanzania partially offset generally softer activity across the region.”
Beyond 2017, the IMF expects global growth to be driven entirely by emerging market and developing economies. This expectation is premised on the normalization of growth rates in countries and regions under stress or growing well below potential in 2016–17 (such as Nigeria, Russia, South Africa, Latin America,parts of the Middle East), China maintaining its transition toward consumption- and services-based growth,and continued resilience in other countries.
While blaming rising inflation on the drastic changes in the exchange rates of countries like Nigeria, the IMF says “
Policies in commodity-dependent countries have been slow to adjust to the difficult economic conditions. After widening sharply in 2015, current account deficits are expected to narrow slightly in 2016, helped in part by exchange rate depreciation.
“But exchange rate depreciations have also raised inflation for some (for example, Mozambique, Nigeria, and Zambia) or increased external debt liabilities. Fiscal deficits are likely to remain elevated through 2016 as weaker revenues offset cutbacks in spending.
“Among diversified economies, fiscal and external current account positions have not improved despite continued strong economic growth, reflecting limited progress in adopting counter cyclical policies—particularly with current spending outpacing revenue in some cases.